The current rally is great chance for investors to exit the market, Sandeep Bhatia of Kotak Institutional Equities said. Fundamentally nothing has changed to warrant a market rally and will take around two-three years before things improve structurally, he told CNBC-TV18 in an interview.
The Nifty rallied 3 percent last week and the Sensex gained 463 supported largely by inflow of foreign money. He further added that if Nifty moves to the psychological 6,000 mark then one should use it as an opportunity to book profits.
CNBC-TV18’s Udayan Mukherjee is also of the view that the rally seen in emerging markets is the past few days is driven by global liquidity and has nothing to do with domestic factors.
Meanwhile, Bhatia, who prefers sticking to large caps now, is positive on auto players Tata Motors & Bajaj Auto. From the FMCG pack, he is betting on ITC as its volume growth looks robust. He is also looking to stay invested in oil and gas major RIL. From the midcaps, he is bullish on Glenmark Pharma.
Bhatia remains underweight on metals space. Also, he feels that the pressure seen on pharma player Ranbaxy is due to unwinding of short-term trades. USFDA has issued an import alert on the company’s Mohali unit pulling the stock down more than 30 percent today. It will take long time before things settle down for Ranbaxy, he added.
Below is the edited transcript of Sandeep Bhatia’s interview with CNBC-TV18
Q: We still are grappling with very weak fundamentals whether it is GDP, fiscal deficit or current account deficit (CAD) and yet this rally is with us and we have seen foreign institutional investors (FIIs) flows, how long can this go?
A: This is clearly a feel good rally. Anyone who is objective, anyone who wants to look at the entire spectrum of economic newsflow which is coming in, will definitely acknowledge that where we were in August and where we are now in September, nothing has changed dramatically to justify the kind of market moves that we have seen. What has only happened is that some expectations again have been raised. We have seen a new policymaker take charge, we have also seen hope that some of the tapering that we were expecting which should happen starting October-November may not be as dramatic.
Whether this all means anything fundamentally changing, I don’t think so. This is for any disciplined investor, a very good chance to get out. We have got a fantastic rally, this is nothing but the feel good rally. The trade deficit, the CAD are at two decades low. The damage done to the economy in the last three-four years would take well over two-three years before we start showing structural improvements. The investor sentiment continues to remain weak. Even if we get a bounce back on the back of a good monsoon right now, that doesn’t mean that the underlying growth trends of the economy have changed.
Given these facts, I would think that this is a fantastic time to book some profits and investors to cash in these highest prices.
Q: Do you buy nothing at all now or would you pack in something at this juncture even in export theme which looked so lucrative at 68/USD now doesn’t look like much of a theme?
A: No, I don’t think the export theme goes away. I generally don’t mean that. I don’t believe that everyday in the morning you have to get up and trade. If you do that, you will definitely be out of the market very soon with no money left. If you take away that kind of a thought process from your head, then the market gives you opportunities where it goes through immense elation or intense depression. If it was a real human being, it would be having bipolar disorder.
Right now, we have to take advantage of this kind of a rally, I don’t think the export theme has gone away; I would still be a buyer in the technology stocks. The manufacturing response from India will happen, but it will happen over the next two-three years. Auto stocks will benefit. We have liked Tata Motors on the back of that. There are themes that we would play, but is this the day where you should get in and put some money at play by investing in the markets, I don’t think so.